Introduction

This document provides a guide for new agents who are establishing a
business in residential real estate. Used properly, it will help you determine
basic metrics for creating a successful business, including your expected
earnings, expenses and measures for performance. It is not intended to be a
substitute for the services of a financial advisor or the guidance of an
experienced broker supervisor.

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Instructions
can also add to Drive by going to File > Make a Copy.
For green cells, you will need to supply numbers. Red cells are calculated for
you. For example:

$150 Enter your own number here.

$300 This number is calculated for you.

The default numbers in green cells are base on industry averages. If you are
unsure what to enter, the default value is probably a good estimate. You may
overrride numbers in red cells by entering your own numbers, but these
numbers will no longer be updated automatically as other numbers change.

You should go through the sheets in order from left-to-right. Here is a

summary of what each sheet contains:

Income & Assumptions Enter your goals and assumptions

Startup Expenses Enter one-time startup expenses
Year 1 Expenses Enter recurring expenses
Year 2 Expenses These are calculated base on growth
Year 3 Expenses These are calculated base on growth
Goals The goals you will need to meet
STEP 1 - INCOME

On this sheet you will enter information about your anticipated sales and commissions.

Category Item Amount

Assumptions Average sales price $250,000

Average commission 2.75%
Growth Rate 30%
Close Rate 1.00%

Target Income Year 1 $25,000

Year 2 $32,500
Year 3 $42,250
r anticipated sales and commissions.

Description

The average sale price of properties in your target market.

The average commission percentage you will earn on transactions, as either the buyer or seller agent.
The annual growth rate you would like in your income for the first three years.
The percentage of leads you work that eventually lead to transactions.

Enter the amount you would like to earn in your first year, before taxes.
This would be your earnings in Year 2, based on your predicted growth rate.
This would be your earnings in Year 3, based on your predicted growth rate.
STEP 2 - START-UP EXPENSES
On this sheet you will enter information about the costs of starting your business. These are initial costs that don
costs over three years.

Category Item Amount

Licensing Initial Training $300

State Exam Fee $80
Additional Fees $200

Personal Wardrobe $400

Cell Phone $200
Computer $1,000
Car $2,000
Miscellaneous $100

Business Business Cards $35

Website $75
Domain Name $35
MLS Fee $2,000

Total $6,425
costs of starting your business. These are initial costs that don't recur year-after-year. When calculating your goals, it is assumed you

Description

The cost of your training to prepare for your state licensing examination.
The cost of taking your state licensing exam. Do not include your annual renewal costs.
Depending on your state, you may be required to complete a criminal background check or have other fees associated w

You will need to look professional on the job. If you don't already have appropriate business attire, budget for that here.
If you don't already have a cell phone, you will need one for communicating with clients. Enter the cost of the phone, not
You will need to a computer to conduct business. Enter the price of purchase if you need to buy or upgrade your comput
You will spend a lot of time driving. If you need to purchase or repair your car, enter that cost here.
Enter any other one-time personal expenses you expect to incur (a desk, office supplies, etc.)

Enter the cost of getting business cards printed for yourself.

Enter the set-up cost for a website to promote your business. Include only the set-up costs, not recurring costs.
You will need a domain name for your website. Enter the cost of reserving your domain name.
Cost to join your local multiple listing service.
STEP 3 - YEAR 1 EXPENSES

On this sheet you will enter information about the costs of running your business in its first year. These are costs

Category Item Amount

Professional Annual License Fee $100

Training $400
Professional Assoc. $200

Personal Wardrobe $400

Cell Phone $600
Internet Access $400
Car $5,500
Miscellaneous $300

Business Broker fee $3,600

Website $125
Marketing $5,000
Miscellaneous $500

Total $17,125
costs of running your business in its first year. These are costs that you expect to recur year-after-year and potentially grow.

Description

The cost of your renewing your license each year.

Your annual cost of taking additional training courses.
Your annual fees for professional associations.

Enter your annual cost of maintaining a professional wardrobe.

Your annual cell phone expense. If you also your phone is also for personal use, enter 50% of your bill.
If you need high-speed internet access from home for your business, enter the annual cost of that here.
Your annual cost for operating your car for business expenses. A good rule of thumb is $0.55 for every mile driven (10,00
Any other personal expenses you expect to incur. Enter the annual cost.

If applicable, enter the total annual fees owed to your broker.

Enter any annual costs you have for your website, such as hosting.
Enter the annual amount you expect to spend on marketing, including advertising, printed materials and all other forms
Enter any additional annual costs not categorized elsewhere.
STEP 4 - YEAR 2 EXPENSES

These are predicted expenses for your second year in business. They have calculated by adjusting your first year'

Category Item Amount

Professional Annual License Fee $100

Training $400
Professional Assoc. $200

Personal Wardrobe $400

Cell Phone $600
Internet Access $400
Car $5,500
Miscellaneous $300

Business Broker fee $3,600

Website $125
Marketing $6,500
Miscellaneous $500

Total $18,625
in business. They have calculated by adjusting your first year's expenses based on the growth you predicted on the Income sheet.

Description

The cost of your renewing your license each year.

Your annual cost of taking additional training courses.
Your annual fees for professional associations.

Enter your annual cost of maintaining a professional wardrobe.

Your annual cell phone expense. If you also your phone is also for personal use, enter 50% of your bill.
If you need high-speed internet access from home for your business, enter the annual cost of that here.
Your annual cost for operating your car for business expenses. A good rule of thumb is $0.55 for every mile driven (10,00
Any other personal expenses you expect to incur. Enter the annual cost.

If applicable, enter the total annual fees owed to your broker.

Enter any annual costs you have for your website, such as hosting.
Enter the annual amount you expect to spend on marketing, including advertising, printed materials and all other forms
Enter any additional annual costs not categorized elsewhere.
STEP 5 - YEAR 3 EXPENSES

These are predicted expenses for your third year in business. They have calculated by adjusting your second year

Category Item Amount

Professional Annual License Fee $100

Training $400
Professional Assoc. $200

Personal Wardrobe $400

Cell Phone $600
Internet Access $400
Car $5,500
Miscellaneous $300

Business Broker fee $3,600

Website $125
Marketing $8,450
Miscellaneous $500

Total $20,575
n business. They have calculated by adjusting your second year's expenses based on the growth you predicted on the Income sheet.

Description

The cost of your renewing your license each year.

Your annual cost of taking additional training courses.
Your annual fees for professional associations.

Enter your annual cost of maintaining a professional wardrobe.

Your annual cell phone expense. If you also your phone is also for personal use, enter 50% of your bill.
If you need high-speed internet access from home for your business, enter the annual cost of that here.
Your annual cost for operating your car for business expenses. A good rule of thumb is $0.55 for every mile driven (10,00
Any other personal expenses you expect to incur. Enter the annual cost.

If applicable, enter the total annual fees owed to your broker.

Enter any annual costs you have for your website, such as hosting.
Enter the annual amount you expect to spend on marketing, including advertising, printed materials and all other forms
Enter any additional annual costs not categorized elsewhere.
STEP 6 - RESULTS

This sheets show the results of your calculations. You should adjust your numbers on previous sheets based on th

Category Item Amount

Gross Revenue Year 1 $1,609,697

Year 2 $1,936,970
Year 3 $2,362,424

Transactions Year 1 6
Year 2 8
Year 3 9

Leads Year 1 644

Year 2 775
Year 3 945

Cost-per-Lead Year 1 $7.77

Year 2 $8.39
Year 3 $8.94
You should adjust your numbers on previous sheets based on the results here.

Notes

This is the total value of the transactions you will need to close each year to meet your income goals. Check with existing
see if these goals are reasonable. If not, you will need to reduce your expenses, lower your income goal, or increase your

This is the total of transactions you will need to complete each year to meet your income goals. Again, check with existin
are reasonable. Remember: Each transaction takes time. If you are working alone and part-time, you are unlikely to be a
transactions a month!

The total number of leads you will likely need to work based on your close rate. Working leads takes time. If these num
need to improve your close rate or find ways to automate your marketing.

Based on your marketing budget, how much you can spend to reach each lead. Check with knowledgeable agents in you
this number. If is quite low (say $1 per lead) you are probably not being realistic about how much you need to spend on
(say $10 per lead) you can probably reduce your expenses and still meet your goals.